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Last Updated: 27 June 2024

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SASKATOON — Canada’s canola growers should not expect much price support from palm oil in 2024-25.

Regina Koh, market reporter for Fastmarkets, anticipates a modest improvement in global palm oil production this year, but the same can’t be said for the other side of the ledger.

 “There is no strong demand catalyst to propel prices significantly higher,” she said during a recent Fastmarkets webinar.

Palm oil prices are about half the level they were at the peak of 2022, shortly after the outbreak of war in Ukraine and Indonesia announcing an export ban on the product.

That led to palm oil trading at a premium to rival products such as soybean oil and sunflower oil for a prolonged period.

Prices cooled in 2023 and then perked up again in April 2024 due to tightness of supply compared to soybean and sunflower oil.

Prices have since subsided due to the official demise of El Nino and the anticipated arrival of La Nina somewhere in the July to September timeframe.

El Nino typically hurts palm oil production while La Nina enhances it, although there can be a six-to-nine-month lag for weather effects on trees.

Koh expects Malaysian crude palm oil futures prices in 2024 to remain rangebound in the neighbourhood of 3,600 to 4,000 Malaysian ringgets (MYR).

That is well below the highs of 7,000 MYR achieved in 2022 but in line with the 2023 average of 3,796 MYR.

Malaysia’s crude palm oil production was 7.5 million tonnes for the first five months of 2024, which is better than it has been for the same period the last three years.

She expects total annual production to be in line with the 19.26 million tonnes produced in 2020. That is due primarily to better labour supply in the post-COVID era.

Indonesia’s prices have been elevated longer than usual due to low stocks heading into 2024.

The country has a “chronic problem” of aging trees and slow replanting of those trees.

However, improved fertilizer application and a mild El Nino should result in 48 million tonnes of production for the world’s biggest palm oil producer.

That would be down from last year but similar to 2022’s output.

However, the country’s new B35 (35 per cent) biodiesel blending mandate could reduce the amount of supply available for export.

An estimated 13.41 million kilolitres of biodiesel will be consumed, up from 13.15 million kilolitres in 2023.

Koh anticipates the government will boost the mandate to B40 (40 per cent) by the end of the year.

Palm had been trading at a premium to soybean and sunflower oil into the Indian market earlier this year but that has changed in recent months.

“Palm is back to trading at a discount to its rivals,” she said.

“This will help to boost its demand for June and July imports.”

India imported a record 16.5 million tonnes of vegetable oil in 2022-23 (October-November). She expects that number to fall to 15.2 to 15.6 million tonnes in 2023-24.

The country is expected to harvest a good crop of its own oilseeds, particularly rapeseed. As well, edible oil prices are higher than last year, which is discouraging imports.

India’s palm oil imports are forecast at 9.4 to 9.6 million tonnes, which would be a drop from last year due to stiff price competition from soybean oil now that Argentina is back in the market.

China’s vegetable oil imports peaked at 10.4 million tonnes in 2021.

“Since then, it has been a bit of a yo-yo,” she said.

Imports fell in 2022 and then rebounded in 2023. She thinks vegetable oil imports will dip to 8.43 million tonnes in 2024 from 9.93 million tonnes last year.

Restocking is happening at a slower pace than last year, partly because of the surge in palm oil prices in March-April.

Palm oil is facing stiff competition in China from competing products, particularly rapeseed/canola oil.

https://www.producer.com/news/palm-oil-prices-cool/

Sumber : The Western Producer

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Last Updated: 25 June 2024

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The Malaysian Palm Oil Board (MPOB) has called for an oil hub or redistribution centre to be set up in Egypt to build on recent cooperation between the two countries, the New Straits Times reported.

MPOB director general Dr Ahmad Parveez Ghulam Kadir was quoted as saying the initiative had mutual benefits and was in line with the countries’ aim to cooperate in investments within the agro-commodities sectors and bulking facilities.

“By leveraging Egypt’s strategic position and ability to re-export to neighbouring countries, Malaysia can consider establishing a hub for Malaysian palm-based downstream products at one of Egypt’s major ports,” Dr Kadir told Business Times.

The proposed hub in Egypt would serve as a vital link in the distribution chain, ensuring timely delivery of palm oil products to markets in the Middle East and North Africa, the 6 June report said.

“This can also encourage small quantity imports by Egyptian industry members directly from Malaysian exporters, thus eliminating the additional cost of dealing with a third party,” Dr Kadir added.

In addition, he said Malaysia could establish its distribution hub in the Suez Canal Economic Zone (SCZONE), to provide facilities to boost the market presence of Malaysian palm-based products in the region.

For this reason, he said the Malaysian oil palm industry could consider investing in bulking facilities in Egypt to gain market share in this region.

"Egypt, with its unique geography, has high potential to be an economic and industrial hub, linking Europe, the Middle East and Africa – a unique trade triangle connected to the world via the Suez Canal,” he said.

https://www.ofimagazine.com/news/mpob-calls-for-setting-up-of-oil-hub-or-redistribution-centre-in-egypt

Sumber : Oil and Fat International

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Last Updated: 25 June 2024

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THE benchmark active Malaysian crude palm oil futures contract experienced a notable decline after reaching RM4,443 per metric tonne in early April. This came after the breakout of a mid-term parabolic bowl accumulation pattern that began forming in July 2023 and culminated in mid-March 2024. Bearish sentiments, influenced by anticipated weaker exports, increased production, lack of competitive pricing against other vegetable oil substitutes and stabilisation of the Malaysian ringgit after its continued depreciation, have driven this decline.

The recent decline in crude palm oil prices has restored its price competitiveness against other vegetable oils as spreads narrowed, supporting current price levels. However, any potential for significant upside may be limited if it becomes relatively more expensive compared to its substitutes.

Therefore, sharp price movements are likely to quickly retrace and normalise without strong fundamental triggers from demand and supply. Since May 2024, the palm oil market has entered a phase of price consolidation, forming a short-term symmetrical triangle with prices converging around RM3,930 per metric tonne. A breakout from this pattern is anticipated within the next one to two weeks.

Zooming out, the current price patterns align with a longer-term parabolic bowl accumulation pattern that began forming in July 2022, following a sharp decline from the all-time high in Q2 2022.

Looking ahead, the likely path appears to be upward for the coming month, with immediate resistance at RM4,150 per metric tonne and stronger resistance at RM4,500 per metric tonne, which coincides with the resistance line of the longer-term pattern. Conversely, if market fundamentals trigger a downside breakout from the symmetrical triangle, support levels are expected at RM3,800 and RM3,500 per metric tonne.

This would maintain alignment with the longer-term pattern, set to complete by Q2 2025, targeting the RM4,500 resistance level by then.

The Malaysian ringgit, pivotal in crude palm oil futures trading, shows potential for appreciation against the US dollar following a triple top formation in the USD/MYR pair in October 2023, February 2024, and April 2024. This suggests limited upside potential for palm oil prices due to increased costs for US dollar holders, potentially dampening demand.

https://www.businesstimes.com.sg/companies-markets/crude-palm-oil-futures-set-gradual-ascent

Sumber : The Business Times

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Last Updated: 20 June 2024

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Palm oil has long been a key trade priority for Indonesia. However, as the fourth most populous country in the world, Indonesia is increasingly concerned about the intensifying negative campaigns against palm oil. These campaigns are driven by NGOs, competing vegetable oil industries, and governments at both central and regional levels in various countries. For instance, the European Union (EU) adopted the Renewable Energy Directive II (RED II), which arbitrarily categorizes palm oil as a high "Indirect Land Use Change" (ILUC) risk commodity. This directive mandates a reduction in palm oil consumption in the EU starting in 2021, aiming for its eventual elimination by December 31, 2030.

More recently, the EU introduced the EU Deforestation Regulation (EUDR), a policy framework aimed at reducing the environmental impact of deforestation. The EUDR requires operators and traders who place seven commodities (palm oil, coffee, cocoa, rubber, wood, soy, and cattle) on the EU market or export them from the EU to prove that these products are legal and do not come from land deforested or degraded after December 31, 2020.

Elsewhere, Norway has excluded palm oil biofuel from government procurement processes, a regional state in Pakistan proposed a tariff increase on palm oil for health-related reasons, and India has repeatedly raised its import tariffs on palm oil due to domestic political considerations. This situation evokes the beggar-thy-neighbor policy, where one country addresses its economic issues through measures that often exacerbate the economic difficulties of other nations.

For producing countries, palm oil represents more than just a commodity. The palm oil sector provides livelihoods for 16 million Indonesians through direct and indirect employment. Small farmers in rural and remote areas are heavily involved in palm plantations, comprising 42 percent in Indonesia, 40 percent in Malaysia, and 80 percent in Nigeria. In Indonesia alone, about 61 cities and small towns rely on this sector for their development and sustenance. Additionally, palm oil is a crucial source of export revenue for Indonesia, generating around $ 22.67 billion in 2023, with the EU, China, and India being the primary export destinations.

Given these stakes, it is unsurprising that Indonesia voices significant concerns over increased efforts to wage a trade war against palm oil. From Indonesia's perspective, if the issue is environmental impact, then all vegetable oils should be treated equally. Targeting palm oil without applying the same standards to other vegetable oils appears discriminatory and biased. Indonesia believes that environmental issues should be addressed holistically, without singling out specific products or sectors.

A report issued by the European Commission's Directorate-General for Environment (DG Envi) in 2013, titled "The Impact of EU Consumption on Deforestation," suggests that globally, the main crops contributing directly or indirectly to deforestation include soybeans (19 percent), maize (11 percent), oil palm (8 percent), rice (6 percent), and sugar cane (5 percent). Another report highlights that livestock is a primary non-vegetable oil contributor to deforestation, responsible for 18% of greenhouse gas emissions, 55% of water consumption, and 45% of land use.

Regarding health concerns, existing studies suggest that consuming saturated fatty acids from palm oil does not inherently increase the risk of cardiovascular diseases. Even if saturated fats need to be regulated, measures should be non-discriminatory, targeting all food products containing saturated fats, regardless of their origin.

Other vegetable oils also pose health risks. For example, canola oil is associated with kidney and liver problems, heart conditions, hypertension, strokes, and growth retardation in infants due to its erucic acid content and higher trans fat levels. Over 90 percent of canola oil is genetically modified, raising concerns about toxicity, allergic reactions, immune suppression, cancer, and nutritional loss. Similarly, soybean oil is linked to obesity, diabetes, cardiovascular diseases, and inflammation due to excessive Omega-6 fatty acids. It is also manufactured using harsh chemical solvents, which can cause serious health issues.

The question remains: why is palm oil continually blamed as the main source of environmental and health problems? Palm oil is the most efficient oil crop, producing the highest tonnage per hectare. When sustainably produced and properly processed, palm oil is not a threat to nature or human health but rather a gift from nature. Campaigning against palm oil in favor of other vegetable oils will be perceived as punitive by Indonesian farmers. This approach neither addresses the issues effectively nor promotes free and fair trade.

As global value chains face disruptions and more countries adopt reciprocal trade measures, Indonesia might consider following suit if it feels unfairly treated. However, Indonesia remains hopeful that fair trade is possible, which is why it brought the palm oil issue to the WTO against the EU. It is a matter of principle, and the government should not trade off its offensive stand on palm oil for its defensive interest in nickel, for example. Indonesia should hold its ground, as the livelihoods of millions are at stake.

https://jakartaglobe.id/opinion/draconian-policy-against-palm-oil

Sumber : Jakarta Globe